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Pound falls sharply as risk of chaotic Brexit rises

The British pound dropped sharply on Thursday after two key UK government ministers resigned, plunging the B...

Posted: Nov 15, 2018 7:35 PM
Updated: Nov 15, 2018 7:35 PM

The British pound dropped sharply on Thursday after two key UK government ministers resigned, plunging the Brexit process into deep uncertainty and hiking the risk of a chaotic rupture with the European Union.

Brexit Secretary Dominic Raab said in a statement on Thursday that he "cannot in good conscience support the terms proposed for our deal" to leave the European Union. He is the second Brexit Secretary to resign this year.

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Theresa May

Work and Pensions Secretary Esther McVey resigned about an hour later, saying the draft deal does not honor the result of the Brexit referendum in 2016. There were more resignations at a junior level from Prime Minister Theresa May's government, and an open call from one leading Brexit supporter for May to resign.

The United Kingdom is due to leave the bloc — its biggest trading partner — on March 29, 2019.

The pound fell as much as 2% against the dollar to below $1.28 before trimming those losses slightly after May said she would fight to save her deal. Shares in UK banks declined sharply, with Lloyds (LYG) and Barclays (BCS) shedding over 4% and Royal Bank of Scotland dropping nearly 10%.

The political upheaval could derail the Brexit agreement May has painstakingly negotiated with the European Union. May said Wednesday that she had secured the support of her cabinet for the deal, but its future is now in real doubt. She faces opposition from all sides in the UK parliament.

She also warned that the alternatives to her plan were leaving the European Union without a deal, or Brexit not happening at all.

Investors are most worried about a scenario in which Britain crashes out of the European Union without having negotiated an orderly departure. That would mean new trade barriers, disruption to supply chains for food, medicines and manufactured goods, and a shock to the broader economy.

"The risk of very disorderly Brexit is increasing as we speak," said John Wraith, head of UK rates strategy at UBS.

The International Monetary Fund said in a report published Wednesday that a disorderly exit from the European Union would "lead to widespread disruptions in production and services," and severe market consequences.

"A sudden shift in investors' preference for UK assets could lead to a sharp fall in asset prices and a hit to consumer and business confidence," the IMF warned.

Over the long run, the fund said the UK economy would be 5% to 8% smaller under a "no deal scenario" than if the country had remained in the European Union.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1112735

Reported Deaths: 17652
CountyCasesDeaths
Marion1450832237
Lake721711247
Allen66684881
Hamilton50838487
St. Joseph49493645
Elkhart40079546
Vanderburgh34553496
Tippecanoe30654274
Johnson27559465
Hendricks26181383
Porter25556386
Madison21002452
Clark20146278
Vigo18966309
LaPorte17115261
Delaware16666300
Howard16666313
Monroe16556220
Kosciusko14216167
Hancock13061185
Bartholomew12894190
Warrick12152190
Wayne12036268
Floyd11968226
Grant11901242
Morgan10360192
Boone9815122
Noble9234122
Henry9142167
Marshall9062147
Dearborn8923100
Dubois8815139
Shelby8210129
Cass8134127
Lawrence8018185
DeKalb7761108
Jackson764093
Huntington7601113
Gibson7074118
Montgomery7052123
Harrison6923100
Knox6896115
Steuben665889
Miami6563111
Whitley655360
Putnam641584
Clinton624579
Wabash6182111
Jasper610892
Jefferson5796104
Ripley555893
Adams540581
Daviess5062117
Scott488280
Wells4814104
White475669
Greene4680100
Clay462862
Decatur4597110
Jennings448867
Fayette448396
LaGrange425990
Posey407544
Randolph3908107
Washington389856
Fountain373464
Fulton362474
Spencer360747
Starke353574
Owen351277
Sullivan347554
Orange329172
Jay328850
Rush306832
Carroll294239
Franklin290844
Perry288553
Vermillion282758
Tipton250066
Parke249630
Pike247244
Blackford221244
Pulaski208559
Newton181752
Brown176150
Crawford168829
Benton166517
Martin151820
Switzerland147212
Warren135316
Union121016
Ohio92113
Unassigned0592

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1708292

Reported Deaths: 26587
CountyCasesDeaths
Franklin1785651827
Cuyahoga1669492640
Hamilton1132851528
Montgomery801921395
Summit715401199
Lucas627081020
Butler56598805
Stark535121171
Lorain41895642
Warren35785412
Mahoning35635771
Lake32124495
Clermont31120363
Trumbull27130616
Delaware27046182
Licking26528336
Medina25825351
Fairfield24511287
Greene24265372
Clark21980387
Portage21117281
Richland20947340
Wood20015246
Allen18870320
Miami17196348
Columbiana16795332
Muskingum16644206
Wayne15664306
Tuscarawas14329360
Marion13250194
Ashtabula12618232
Erie12602198
Scioto12416184
Pickaway12208153
Ross11639225
Hancock11448173
Geauga10863175
Lawrence10617172
Belmont10416234
Huron9765158
Jefferson9601227
Union954075
Sandusky9272166
Seneca8853157
Knox8761170
Washington8675158
Darke8365180
Athens835396
Ashland7956149
Auglaize7897117
Shelby7459133
Defiance7331115
Crawford7233150
Fulton7167112
Brown7135115
Logan6975108
Guernsey691484
Mercer689998
Highland6718119
Clinton6493106
Madison648089
Williams645199
Preble6243140
Putnam6220120
Jackson578896
Champaign578487
Perry564979
Coshocton5623104
Ottawa561999
Morrow515264
Fayette492170
Hardin485999
Gallia469678
Van Wert465693
Pike463476
Adams4569109
Henry432378
Hocking407193
Holmes3989140
Wyandot374973
Carroll363978
Paulding323851
Meigs304959
Monroe235561
Noble219647
Morgan215238
Harrison210953
Vinton186937
Unassigned06
Fort Wayne
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After a nice warm-up, it’s back to reality to round out the workweek.
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